Contributed by the positive recovery of US economy and European
Union, the global economic outlook remains optimistic; however,
the outlook can be offset by potential uncertainties such as the
trade conflict between Washington and Beijing. Despite of all that,
Taiwan's Q1 performance in its external market was surprisingly
better than expected thanks to strong world demands in new technology
and machinery equipment. As a result, the Taiwan Institute of Economic
Research (TIER) adjusts its annual GDP forecast upward. Taiwan's
GDP is predicted to grow by 2.45% this year. It would be 0.11 percentage
points higher than TIER's previous forecast.
Taiwan's exports in March 2018 increased significantly by 16.72%
compared with the same month of 2017. Regarding imports, Taiwan's
imports in March 2018 increased by 10.44% compared with imports
in March 2017. Exports and imports grew by 10.62% and 11.0% y-o-y
respectively from January 1st till the end of March this year, Taiwan's
exports and imports gave a trade surplus of US$ 1.18 billion or
an increase by 8.51% on a y-o-y basis during the entire year.
Taiwan's consumer price index (CPI) went up by 1.57% in March 2018
compared with the same month of previous year. The core inflation
rate stood at 1.53% in March, 2018. In addition, the wholesale price
index (WPI) moved up by 0.46% in March 2018 on the year-on-year
basis. On the cumulative basis, the CPI went up by 1.54% and WPI
went down 0.17% for the first quarter of 2018 compared with the
same period last year.
As for exchange rate, the NTD went weaker due to the relatively
stronger USD, as the Fed had sent out its certain hawkish messages
and hot money continued to flow out. Anyway, the NTD/USD stood at
29.12 in late March 2018 indicating only a mild 0.38% appreciation.
Regarding the interest rate, it remained low and steady in March
2018 due to the continued loose monetary operations by the CBC with
respect to the most recent CPI reading and potential global uncertainties;
the lowest and highest over-night call rate in March 2018 stood
at 0.177% and 0.184% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were
better than expected in the target month was 49.7% or increased
by 35.0 percentage points compared with respondents who perceiving
better business in the previous month. The portion of those perceived
business were getting worse in the target month was 10.1% or decreased
by 31.4 percentage points than 41.5% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 40.2% or decreased
by 3.7 percentage points compared with 43.9% perceiving constant
business in the previous month. Overall, manufacturing firms perceived
the business in the target month was rather optimistic.
In addition, the portion of manufacturers who perceived business
would be better in the next six months was 29.8% in the target month
or decreased by 19.9 percentage points than 49.7% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 7.1% or decreased
by 1.4 percentage points compared with 8.5% feeling rather pessimistic
about the future in the previous month. The portion of manufacturing
firms who perceived business remained constant in the next six months
stood at 63.1% or increased by 21.2 percentage points compared with
41.9% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was also quite neutral.
The manufacturing composite indicator for March, 2018 adjusted for
seasonal factors on moving average, saw an upward correction, and
from a revision of as 98.24 points in February moved up to 100.05
points in March. Figure 1 shows an increase of 1.81 points.
The TIER service sector composite indicator for March, 2018 adjusted
for seasonal factors on moving average, also saw an upward correlation,
and from a revision of as 93.16 points in February moved up to 94.39
points in March. Figure 1 shows an increase of 1.23 points.
In addition, the TIER Construction Sector Composite Indicator for
March 2017 adjusted for seasonal factors on moving average also
saw a downward correction, and from a revision of 101.82 points
in February went down to 98.09 points in March. Figure 1 shows an
decrease of 3.73 points, a second month consecutive decline.

Forecast on Individual Industries

Following are manufacturers' sentiments that are industry-specific
in the monthly TIER surveys:

● Manufacturers' sentiments that have been in decline in the March
survey and are expected to deteriorate over the next six months
include:
None.

● Manufacturers' sentiments that have been in decline in the March
survey, but are expected to improve over the next six months include:
Electrical Appliances and Housewares Manufacturing.

● Manufacturers' sentiments that have been in decline in the March
survey and are expected to remain sluggish over the next six months
include:
Slaughtering, Prepared Animal Feeds Manufacturing.

● Manufacturers surveyed who felt the March outlook was the same
as the previous month, but the outlook is expected to exacerbate
over the next six months include:
Yarn Spinning Mills, Restaurants and Hotels.

● Manufacturers surveyed who felt the March outlook was the same
as the previous month, but the outlook is expected to improve over
the next six months include:
Communications Equipment and Apparatus Manufacturing, Precision
Instruments Manufacturing.

● Manufacturers surveyed who felt the March outlook was the same
as the previous month and the trend is expected to continue for
the next six months include:
Manufacturing, Food, Edible Oil Manufacturing, Flour Milling and
Grain Husking , Leather, Fur and Allied Product Manufacturing, Petroleum
and Coal Products Manufacturing, Electrical Machinery, Electrical
Machinery, Supplies Manufacturing and Repairing, Electronic Machinery,
Retail Sales, Telecommunication Services, Transportation and Storage.

● Manufacturers' sentiments that have improved in the March survey
and is expected to deteriorate over the next six months include:
Plastic Products Manufacturing.